U.S. stocks fell, pushing the Nasdaq 100 Index to its biggest three-day retreat since 2011 and erasing the year's gains in the Standard & Poor's 500 Index, as technology shares extended last week's selloff.

The S&P 500 dropped 1.1 percent to 1,845.08 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 166.78 points, or 1 percent, to 16,245.93. The Nasdaq 100 gauge of the biggest technology stocks fell 0.9 percent, bringing its three-day drop to 4.3 percent. The Russell 2000 Index of small companies sank 1.5 percent to an almost two-month low.

"If you take a closer look under the hood, things have been deteriorating for a while now," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio. "Small caps and tech have been breaking down all over the place the past month, with the big blue chips holding tough. Well, now it looks like the last place bulls were hiding is finally starting to crack."

The S&P 500 rose to a record last week before trimming its weekly gain to 0.4 percent in the last two days, as the sell-off in technology shares overshadowed optimism on Federal Reserve monetary stimulus.

Technology shares were hit as traders dumped the biggest winners of the bull market amid concern valuations have advanced too far. The Nasdaq 100 fell the most in two years on April 4 with declines in all but four stocks. The gauge sank 0.9 percent for the week after surging 35 percent in 2013.

The Nasdaq Composite Index, which slid the most in two months on April 4, dropped 1.2 percent Monday. It trades at 31.5 times reported earnings of the companies in the index. That's almost twice the ratio for the S&P 500, which trades at 17 times earnings.

"It's just a continuation of momentum," said Kevin Caron, a Florham Park, N.J.-based market strategist at Stifel Nicolaus & Co., which manages about $160 billion.

"The market, having had a very sharp rally last year, is set to consolidate some of those gains and that's what we're seeing here. It's going to be a tug of war between valuations and the data from here on out."

The selling in the Nasdaq 100 Index has sent anxiety among options traders to the highest levels since the flash crash four years ago. More than 1 million put options on an exchange-traded fund tracking the Nasdaq index changed hands on April 4 as investors sought protection during a 2.7 percent drop in the gauge. That's the most trading in bearish contracts since May 7, 2010, the day after $862 billion was erased from the value of U.S. stocks in a matter of minutes.

Hedge funds that invested heavily in technology shares took a beating in the first quarter as popular holdings such as Chinese Internet company Baidu fell 14 percent and online retailer Amazon.com tumbled 15 percent.

Paul Tudor Jones, Michael Novogratz and Louis Bacon, hedge-fund managers that profited last year from bets on macroeconomic trends, posted losses in the period as some of those trades turned against them. The losses for macro managers have caused them to cut some of their bigger bets, Anthony Lawler, a money manager at the $120 billion Swiss firm GAM, wrote in a report last week. Jones's $13.5 billion Greenwich-based Tudor Investment fell 3.2 percent in its Tudor BVI Global fund in the first three months of this year, according to clients, who asked not to be named because the returns are private.

Alcoa, the largest U.S. aluminum producer, unofficially kicks off the U.S. quarterly earnings season when it releases financial results after the close of trading Tuesday. JPMorgan Chase and Wells Fargo are also among the S&P 500-listed companies reporting this week.

Profit for members of the gauge probably climbed 1 percent in the period, analysts now forecast, after anticipating a 6.6 percent rise in January. Sales rose 2.9 percent on average, according to estimates compiled by Bloomberg. Analysts bet industrial companies will continue to deliver the fastest profit growth amid a weather-related slowdown.

"It will be an interesting few weeks with the earnings season kicking off tomorrow," said Heinz-Gerd Sonnenschein, an equity market strategist at Deutsche Postbank in Bonn, Germany. "Everybody expects a weaker quarter given the headwinds that corporates faced earlier this year. The U.S. market is still strong, not far from a record, but we really need more profit growth to support valuations."

Data last week boosted optimism that the economy is shaking off its winter doldrums and building momentum into the second quarter. Growth in manufacturing accelerated in March, driven by gains in production and orders. The government's jobs report showed employers boosted payrolls last month and the unemployment rate held at 6.7 percent.